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MEDIA RELEASE: Even with worst-case cuts, more revenue will still be needed to solve North Carolina's budget gap

A new study released today finds that even with devastating cuts, a balanced approach that includes revenue is still necessary

RALEIGH (Dec. 13, 2010) -- No matter how many devastating cuts are made to the vital public structures that support North Carolina's economic recovery, a balanced approach that includes revenue will still be needed to close North Carolina's budget gap.

A report released this morning by the NC Justice Center's Budget & Tax center finds that, even under the worst-case cuts proposed by state agencies at Beverly Perdue's direction, raising more than one billion dollars in revenue would still be required.

"Investments in North Carolina's schools, health care, and public safety programs are crucial to preserving economic recovery," said Edwin McLenaghan, a policy analyst with the Budget & Tax Center who authored the report. "Not only would a cuts-only approach devastate our economic health, such an approach wouldn't even work to fix the state's budget gap."

The report's main findings include:

Even the worst-case budget cut scenarios of 10 percent for public schools, community colleges, and universities and 15 percent for all other state agencies will come up $1.1 billion short of closing the state’s $3.7 billion estimated revenue shortfall next year.

Closing the shortfall with additional cuts to non-education agencies would force across-the-board cuts of 27 percent compared to this year and more than one-third compared to pre-recession levels. Cuts of this magnitude would jeopardize long-term investments in North Carolina’s public structures and would compromise public safety, environmental protection, and the health of communities across the state.

Raising revenue equal to the amount in the current temporary tax package—just under $1.4 billion—would merely hold the line at the “worst case” scenarios proposed by state agencies. Comprehensive revenue reform could raise even more revenue and preserve many of the public investments in initiatives like Smart Start, More At Four, smaller class sizes, and community-based care that North Carolinians overwhelmingly support and that save the state money in the long run.